TMI Blog2014 (3) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the appellant the said order regarding getting the copies of the documents has not been stayed. Perusal of documents whose summoning or production is prayed by the appellant also reveals that the particulars given are not complete and on the basis of the information given by the appellant neither it could be inferred that they are relevant nor they can be summon easily nor the direction could be given by the Adjudicating Authority to concern authorities to produce the documents whose production is sought by the appellant. The prayer of the Appellant is liable to be declined also on this ground. For 'reason to believe' the respondent's belief must be in good faith and it should not be a mere pretence and it would be open to examine whether 'reasons for believe' have a rational connection or a relevant bearing to the formation of the belief. On consideration of section 5 and section 8 of the Act, it is apparent that section 5 contemplates and requires that respondent not only to have 'reasons to believe', but the reasons for such beliefs have to be recorded in writing. Whereas section 8 requires that on receipt of complaint, if Adjudicating Authority has reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lief sought by the appellant in this appeal. - FPA-PMLA-549/AHD/2014 - - - Dated:- 26-3-2014 - Anil Kumar, and Arun Kumar Agarwal For the Appellant: V. Datar and Amit Mahajan, Advocates For the Respondents: Sayeed Ahmed Saud, Advocate JUDGMENT FPA-PMLA-549/AHD/2014 1. The Appellant is aggrieved by alleged dismissal of his application dated 23.01.2014 filed before the Adjudicating Authority in OC No. 225 of 2013, H.S. Jain, Deputy Director Vs. M/s. Neptune Overseas Ltd. ors. seeking directions to summon the documents mentioned in Annexure A of the application and to give liberty to the appellant to file a detailed reply after the due examination of the said documents. 2. The brief relevant fact are that an FIR was lodged on 26.04.2012 by the Police authorities at Crime Branch, Gaekwad Haveli, Ahmedabad, Gujarat, under Sections 406, 408, 409, 420, 465, 466, 467, 468, 471, 477 120(B) of Indian Penal Code (in short 'IPC'), 1860 on the complaint of National Multi Commodity Exchange of India (in short 'NMCE') against suspected persons including the appellant. Sections 420, 467, 471 read with 120(B) of IPC being scheduled offences in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciary responsibility to the NMCE, systematically defrauded, misused and misappropriated its property and committed a series of crimes under various laws for benefiting himself, his family and his family owned and/or family controlled firms. As such, they were all held to be severally and jointly liable not only to return the embezzled, misappropriated and misused funds of the NMCE but also liable to be prosecuted for the alleged offences committed. Based on the same, the above said FIR was got registered by the NMCE followed by the above said complaint filed by the respondent before the Adjudicating Authority. 5. The allegations are also that ATSPL, Ahmedabad and ATSLLC are the family concerns of Appellant. Both, M/s. ATSPL, Ahmedabad and ATSLLC, USA were founded by Appellant's son Shri Amit Gupta along with his mother Smt. Anjana Gupta and Sister Smt. Poonam Gupta respectively. All the three were directors in ATSPL till 15.09.2007. They were replaced by Shri Samar Hemant Kumar Dave and Smt. Preetika Godiwala as shareholders and directors of ATSPL. Shri Yogesh Vinod Chandra Shah was the Director of ATSPL who resigned w.e.f. 19.11.2007. He is an employee of NMCE. Shri Vijay M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the material produced by the respondent issued notice to the appellant and another and directed them to file the reply. Instead of filing the reply to the notice issued under section 8(1) of the Act, the appellant filed the application under section 11 of the Act and sought production of documents which is allegedly dismissed by the Adjudicating Authority by an oral order against which the present appeal has been filed. 9. The appeal filed by the appellant has the grounds of appeal; a copy of application dated 23.1.2014 and an application filed before the learned Magistrate dated 29.1.2014. The copy of the order against which the present appeal has been filed, has not been filed. The appeal before the tribunal is to be filed in accordance with The Prevention of Money Laundering (Appeal) Rules, 2005. The relevant rules are as under: 3. Form of Appeal (1) Every appeal preferred before the Appellate Tribunal against the order of the Adjudicating Authority or the Director, as the case may be, under section 26 of the Act shall be in the Form as appended to these rules and the appeal shall be in quadruplicate and accompanied by four copies of the order appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions, 2006. Regulation 16, categorically contemplates that an application has to be filed in Form No. 4 which is to be allowed by the Chairperson of the Adjudicating Authority or the Registrar or the Administrative Officer and on grant of application, the Administrative officer or an officer authorized in that behalf will arrange to procure the record of the case and allow inspection of such record on the date and time fixed by the Registrar. The relevant Regulation 16 is as under: 16. Inspection of records.-(a) Inspection of records, upon the application in the prescribed Form No. 4 shall be allowed under the orders of the Chairperson of the Adjudicating Authority, or the Registrar or the Administrative Officer, as the case may be. (b) On grant of application for inspection of the records, the Administrative Officer of an officer authorized in that behalf shall arrange to procure the records of the case and allow inspection of such records on the date and time fixed by the Registrar/Administrative Officer in presence of the officer authorized by the Chairperson of the Adjudicating Authority. (c) The officers supervising inspection may, at any time, prohibit further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating Authority was not liable to respond to the letter of the Appellant even if an oral order was passed and it was incumbent upon the appellant to apply for the certified copy and thereafter to file an application seeking exemption from filing the certified copy on the ground that although the appellant has applied for the certified copy but it has not been provided to him as no written order has been passed by the Adjudicating Authority. In the appeal even no attempt has been made to explain as to why the relevant regulations have not been complied with/followed. Adjudicating Authority was neither duty bound to permit the inspection of the record without the application for inspection which in fact was not sought nor the Adjudicating Authority was liable to supply a certified copy of order dated 27th January, 2014. The appeal before this Tribunal could not be filed without applying for the certified copy of the order impugned before this Tribunal. 15. The act on the part of the appellant in just addressing a communication despite the categorical regulations for obtaining the certified copy and not doing the inspection of the record shows that the whole attempt of the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11 of the Act read with Regulation 18 of the Adjudicating Authority Regulations, 2006 seeking permission to cross examine the witnesses on whose statements, the complaint was allegedly based, which was dismissed by the Adjudicating Authority by an oral order, a writ petition filed against such an order was dismissed and a LPA filed against the dismissal of the writ petition was also dismissed. A Division Bench of Hon'ble Delhi High Court had held in Arun Kumar Misra Vs. Union of India anr . as under: 5. The said writ petitions came up before the learned Single Judge on 17th January, 2014 i.e. on the same date when the complaints were listed before the Adjudicating Authority for final disposal. The learned Single Judge dismissed the writ petitions with the following observations: 'This Court is of the view that at this juncture when the Adjudicating Authority under PMLA is seized of the matter, no interference is called for in the present writ petition. However, petitioner shall be at liberty to raise this grievance in the event it is aggrieved by the final order to be passed by Adjudicating Authority under PMLA. With the aforesaid observations, pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal should exercise its powers under section 35 of the Act. 19. This Tribunal has already held that as the appeal is not according the relevant rules and regulations, and therefore, it is liable to be dismissed. In the circumstances, this Tribunal is not liable to remand the matter back to the Adjudicating Authority nor the Appellant is entitled to invoke the jurisdiction of this Tribunal under section 35 of the Act. 20. The counsel for the appellant had however, during the arguments had submitted in detail the entitlement of the appellant for production of documents. It was observed by the Tribunal that it is not clear in the circumstances whether the plea of the Appellant has been finally rejected or it has to be considered at the time of confirmation of provisional attachment order and may be considered at that time. Therefore, it will be appropriate for this Tribunal not to adjudicate whether the appellant is entitled to invoke the jurisdiction of the Adjudicating Authority under section 11 of the Act as in case this Tribunal holds that the Appellant is not entitled to summon the record, in that case this order shall be binding on the Adjudicating Authority and the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is section shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code. 22. In order to invoke the power of the Adjudicating Authority, the appellant has to show as to how the documents sought to be summoned are relevant keeping in mind that the attachment proceedings under section 5 and 8 of PMLA are rather preliminary in nature and does not contemplate a full trial and that the provisional order is to be adjudicated in a time bound manner. Even the Appellate proceedings are to be decided expeditiously under section 26(6) of PMLA preferably within six months. Perusal of provisional attachment order dated 18th October, 2013 shows that the properties which have been provisionally attached by the Enforcement Directorate/respondent are detailed in Schedule 'P-1'. Apparently the shares which have been attached are properties of M/s. Neptune Overseas Limited which is an independent legal entity. The appellant may have some rights in M/s. Neptune Overseas Limited but it has not been shown as to how the appellant can claim release of attachment of the shares of the company M/s. Neptune Overseas Limited. Nothing has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 of the Code of Civil Procedure which provides that only a necessary or a proper party can be added. Though technically the Code of Civil Procedure is not applicable to the proceedings under PMLA except as enunciated under section 11 and 35 of PMLA, yet for various matters, principles enunciated under the Code has to be followed, as while devising its own procedure as contemplated under PMLA, the Adjudicating Authority and Tribunal cannot act on its own whims and fancies. Therefore, the principles regarding necessary parties and proper parties as evolved under the Code of Civil Procedure regarding their impleadment has to be followed. 25. A necessary party is one without whom no order can be made effectively. A proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding. In order to ascertain whether a person is a necessary party or not what is to be seen is whether in the absence of such a person, there is a possibility of conflicting orders being passed by the Authorities. The only reason which makes it necessary to make a person or legal entity a party to a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncing that the properties of the Company shall be exclusively owned by the Managing Director or some of the shareholders of the company. Can the Managing Director in the facts and circumstances claim relief on behalf of the Company which is not even party in the appeal? The inevitable answer in the facts and circumstances shall be an emphatic 'no' and the appellant cannot be granted any relief claimed by him and the appeal is liable to be dismissed on this ground also. 27. The application for summoning the record for production of documents under section 11 has not been filed by M/s. Neptune Overseas Limited nor it has been filed by the appellant on behalf of the said company. The company may file an appeal or application through the Managing Director, in case the Memorandum or Articles of the Company permit so or if the company has authorized the Managing Director to do so by passing an appropriate resolution. Even in such a case, the company would file the appeal through the person authorized. However, the person authorized cannot file the appeal in his name claiming himself to be the managing director or authorized representative of the company. 28. Perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. The applicant has also demanded the production of the record of Forward Markets Commission. It is pertinent to notice that Forward Markets Commission proceedings were challenged before the Hon'ble Gujarat High Court seeking to set aside the findings of Forward Market Commission. It was noticed by the Hon'ble High Court and observed that the documents had been supplied to the appellants but some of the documents had not been supplied though the Forward Markets Commission had contended that all the documents had been supplied. The Hon'ble High Court had held that in the circumstances, if some documents had not been supplied to M/s. Neptune Overseas Limited another, the same may be supplied on payment of usual charges. The said order of the Division Bench dated 9th February, 2013 in LPA-1039 of 2011 holding that some of the documents be supplied on payment of usual charges has been stayed by Hon'ble Supreme Court in Special Leave to appeal (Civil) No. 7497 of 2012 titled as Anil Kumar Mishra Vs. M/s. Neptune Overseas Limited another holding that the operation of the High Court order dated 9th February, 2012 shall remain stayed and the order dated 23rd July, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court or Hon'ble High Court. 33. From the order produced by the Appellant of the Hon'ble Gujrat High Court, it is apparent that copies of some of the documents were admittedly supplied to the appellant and the Hon'ble Court permitted the appellant to obtain the copies of other documents subject to payment of charges. Even if the said order has not been stayed by the Hon'ble Supreme Court, in that case the appellant should have disclosed which documents he has already got and which documents he require and what is the relevance of them. Appellant is rather demanding all the documents relevant or not without even specifying copies of which documents have been supplied and which documents the appellant is entitled for in terms of the order of Hon'ble Gujrat High Court. This appears to be apparently to delay the disposal of the proceedings for adjudication of provisional attachment order passed by the Respondent. In the circumstances, the appellant cannot be permitted to seek production of all the documents as has been alleged in the annexure annexed with the application. The documents whose production has been sought by the appellant before the Adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the appellant should have obtained the copies of some of the documents by invoking the jurisdiction of Hon'ble High Court of Hon'ble Supreme Court. In the circumstances, it is not appropriate for the Appellant to contend that he is not entitled to file the reply to the notice issued by respondent under section 8(1) of PMLA till he gets the copies of documents. The Appellant could not be permitted to delay the proceedings pertaining to provisional attachment order in the facts and circumstances before the Adjudicating Authority. 36. Consideration of another fact in the facts and circumstances shall be relevant which is that if the Hon'ble Supreme Court has not stayed the order of Hon'ble Gujarat High Court regarding the right of the Appellant to get the copies of some of the documents on payment of charges, then what steps had been taken by the Appellant and M/s. Neptune Overseas Limited from 9th February, 2012 up till the order of Hon'ble Supreme Court on 22nd March, 2012 was passed or even thereafter as according to the learned counsel for the appellant the said order regarding getting the copies of the documents has not been stayed. 37. Perusal of doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al connection or a relevant bearing to the formation of the belief. On consideration of section 5 and section 8 of the Act, it is apparent that section 5 contemplates and requires that respondent not only to have 'reasons to believe', but the reasons for such beliefs have to be recorded in writing. Whereas section 8 requires that on receipt of complaint, if Adjudicating Authority has reason to believe, it can issue a show cause notice, but it does not require that these reasons are to be recorded in writing by Adjudicating Authority. The satisfaction of the adjudicating authority for having the reasons to believe is formed on the basis of complaint sent by the enforcement directorate under section 5(5) of the Act, including copy of the provisional attachment order, copy of charge sheet and other material. In the circumstances, the appellant cannot deny that he cannot be completely absolved of illegality alleged against him and the company. 39. The plea raised by the appellant in his defense that in respect of FIR for the commission of offence, further investigation has been ordered by the learned Magistrate would also not entitle him to summon the documents as alleged by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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